TikTok announced on Thursday that it has established the TikTok USDS Joint Venture LLC, a majority American-owned entity to manage its US business. This move addresses national security concerns linked to its Chinese parent company, ByteDance, and complies with a US law requiring the sale of TikTok's US operations or facing a ban. The joint venture will serve more than 200 million users and 7.5 million businesses, with strict safeguards for data protection and content moderation.

The structure keeps ByteDance's stake at 19.9 percent, below the 20 percent threshold set by the law. Investors include Silver Lake, Oracle, and Abu Dhabi's MGX, each holding 15 percent, alongside others like Dell Family Office, Susquehanna International Group affiliates, and General Atlantic.

Background and Implications of the Deal

The law, passed under former US President Joe Biden, stemmed from fears that China could access Americans' data or influence content via TikTok's algorithm. During his first term, President Donald Trump raised similar warnings, but he delayed enforcement through executive orders, extending the deadline to 22 January. Trump welcomed the deal, claiming credit and thanking Chinese President Xi Jinping for approval.

"I am so happy to have helped in saving TikTok!" Trump posted on Truth Social, according to AFP.

He added that the app would now be owned by "Great American Patriots and Investors" and thanked Xi for "working with us and, ultimately, approving the Deal."

The TikTok US joint venture grants decision-making authority over trust and safety to the new entity, while global operations handle international product integration, e-commerce, and advertising. US user data will reside in Oracle's secure cloud, audited by third-party experts to federal standards.

Responses from Stakeholders

Jasmine Enberg, co-CEO of media company Scalable, told AFP that TikTok users would feel relieved, but questions remain on implementation. She noted the company is likely assuring advertisers of business continuity, adding that major disruptions like a new app download seem unlikely.

TikTok CEO Shou Chew outlined the deal to staff last month, confirming the structure. Adam Presser was appointed CEO of the joint venture, with Will Farrell as chief security officer. The seven-member board, majority American, includes Chew and investment firm executives.

Oracle's Larry Ellison, a Trump ally, features prominently in the arrangement, linking to broader AI partnerships.